Changing Times: Why Innovation Should be at the Heart of Your Business Strategy
From manufacturing to finance to the arts, the UK has always maintained a worldwide reputation for innovation. And the results of our Steps to Growth report, which surveyed 300 owner-managed businesses across the UK, reveal that innovation is still very much at the core of UK business. In fact, 76% of our respondents said that it was either at the heart of their strategy or crucial enough to receive investment. Lord Digby Jones, in an exclusive interview for the report, highlights healthcare, green energy, and digital as three areas in which the UK continues to lead the way. It’s obvious that our proud history of innovation is alive and well - and what’s more, thriving in 2016.
The Continuing Importance of Innovation
Looking closer at the results, we find some interesting differences across sectors. Perhaps unsurprisingly, manufacturing companies were almost unanimous on the vital role that innovation plays in their business. 90% of respondents in that sector agreed that innovation was a central part of their growth strategy for the next 12 months. And leading UK companies in manufacturing continue to innovate. ARM Holdings may not have been a household name until recently, but this week’s announcement that Japanese telecommunications giant SoftBank will purchase the British tech company for $32 billion has put this innovator firmly in the news. The chips produced by ARM provide the processing power for the majority of the world’s smartphones, and they’ve continued to expand their reach by developing semiconductors for household products like fridges and washing machines.
Innovation isn’t just about the obvious – designing and launching new products or services – it’s also about examining your existing processes and finding more efficient ways to run your business. Our survey results showed that 81% of owner-managed businesses in the recruitment sector considered innovation to be important. In the increasingly competitive recruitment market, for instance, companies constantly need to innovate by finding new ways to match candidates and employers on a global scale.
Building an Innovative Company Culture
Innovation is also a product of a business’s culture. Without a supportive environment that fosters employee creativity and allows the space to deviate from the norm, the radical ideas that drive innovation in business will never have the chance to be discovered. Processes like Design Thinking, which allows non-designers to tap into creative techniques to produce original work, are being used by some of the most forward-thinking companies in the UK and worldwide.
Author Steven Johnson, whose book Where Good Ideas Come From: The Natural History of Innovation examines innovators from Gutenberg to Edison, says: “If you look at history, innovation doesn’t come just from giving people incentives; it comes from creating environments where their ideas can connect.” Creating this kind of collaborative environment is essential for any company that wants to be truly innovative.
It may be that smaller companies are best placed to foster that kind of culture. Our survey shows that company size is a key factor when it comes to innovation, which could have something to do with the agility and faster reaction times of smaller businesses. 93% of owner-managed businesses with a turnover of £1m to £2m and 100% of those with fewer than ten staff said it was important. This compared to 65% of those with a turnover above £50m and 72% with more than 500 employees. Thanks to the global reach afforded by the internet, even the smallest UK companies now have the platform to compete on a global scale. And in this environment, innovation is more important than ever.
Innovating Through Adaptation
However, innovation doesn’t always mean reinventing the wheel. UK company Deliveroo is a great example of a business which spotted a gap in the market – the existing network of restaurants that did not provide a delivery service – and innovated by giving customers access to it. By using their own network of self-employed delivery drivers and streamlining the ordering process, Deliveroo has grown exponentially. Their revenues are expected to hit £130m in 2016, and they now provide their ordering and delivery service in 12 countries across Europe and as far afield as Australia and Hong Kong.
The results of our survey clearly demonstrate that companies across the UK, large and small, are aware of the continual need to innovate in order to reach their maximum potential. If you’re not continually striving to innovate then you’ll be left behind your competitors – and that’s why innovation should be at the heart of any great business strategy.
Do you think UK businesses deserve their reputation for innovation? Let us know in the comments.
And for more insights on what it means to be an owner-managed business in the UK in 2016, read the first part of our Steps to Growth report.